MPL stock commentStock of the week: Sico Inc.
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Sico Inc. (TSX-SIC , $14.75) subsidiary Betonel has acquired Mills
Paint Sales of British Columbia. This is a positive development. Sico
remains a buy for long-term gains and rising dividends.
Mills makes housing paint at a plant near Vancouver. It also operates
11 specialty stores in Alberta and B.C. that distribute a full line of
paint and related products. This acquisition will give Sico some
advantages.
First, it'll raise Sico's sales. Last year, Mills generated sales of
$9 million. This should grow since Sico will support Mills'
development and growth.
Second, Sico expects Betonel and Mills to "maximize the marketing
synergies by building on the two companies' complementary strengths
and positioning".
Third, Mills will raise Sico's presence in fast-growing Western
Canada. Even better, Mills' managers will stay on, bringing "their in-
depth knowledge of the British Columbia and Alberta paint markets".
Sico is wise to let local managers operate the business. All too often
companies in Central Canada make mistakes and miss opportunities when
they run empires from Toronto or Montreal.
Fourth, Mills generates a lot of its revenue from professional
painters. This fits with Sico's strategy of doing more business with
professionals.
By the way, Sico can buy back and cancel 685,632 or five per cent of
its shares until Sept. 29, 2006. This past year the company bought
back 53,000 shares. Compete with Sico: buy it for long-term gains and
rising dividends.